VOD platforms form building blocks to profit

AFM Preview 2012

Independent film sellers are finding that the patchwork of overseas video-on-demand platforms represent a godsend due to competition for exclusives within territories and mushrooming aggregate sales.

With fragmentation, many VOD outfits outside the United States pay low fees, but a strategy to mount short-term exclusive deals with one platform as a building block for additional ancillary deals is emerging.

For example, U.K.-based Kaleidoscope Home Entertainment licensed documentary “Something for Nothing: The Art of Rap” with iTunes in the U.K. for a two-week exclusive window in September. While all of Kaleidoscope’s titles are accessible on iTunes and other VOD platforms, the music doc got extra iTunes promotion during the period. “If you have a film with strong reviews and good word of mouth, that will help stimulate the later physical DVD sales as well,” says Spencer Pollard, CEO of Kaleidoscope.

For many indie films, VOD in many territories doesn’t pay minimum guarantees but simply a cut of the revenue or a small license fee that amounts to a few thousand dollars. But those payouts can pile up from multiple territories.

In a survey of its member sales companies, the Independent Film & Television Alliance (IFTA) found the number of VOD and subscription-VOD platforms increasing sharply in international territories from 2011 to 2012. For example, Japan went from 14 VOD/SVOD platforms to 18, and the United Kingdom from 10 to 15 in just one year.

The multitude of VOD platforms contrasts with subscription TV, which tend have one or two behemoths in each territory — one for cable and one for satellite TV.

Media researcher SNL Kagan sees a dramatic upturn in aggregate international digital VOD/pay-per-view revenue for motion pictures, going from just $9.9 million outside the U.S. in 2009 to $224.6 million this year. That’s for online movie VOD overseas, excluding VOD on subscription TV platforms.

“Everybody has been talking about VOD taking off since the late 1990s,” says Bill Anderson, IFTA vice president, research and strategic analysis. “What we didn’t take in account back then is that people didn’t have the broadband capabilities to download. Now broadband penetration in the major markets is deep.”

Films from Hollywood’s majors take a big chunk of the growing overseas sales, but indies are tapping the windfall. Malte Probst, vice president PPV and VOD at Sky Deutschland, Germany’s top subscription TV platform, notes that indies excel among those who appreciate edgy films, and also horror and arthouse genres. Sky Deutschland’s capacity for storing VOD titles on settop boxes will go from 40 to 350 with new hardware rolling out to its satellite TV subscribers.

Chinese VOD platform YoukuTudou also likes acquiring independent movies because they represent a better value than major studio titles, says Huilong Zhu, VP, movies and corporate business development. VOD is catching on with Chinese consumers as Youku Tudou finds movies generate five to six times the consumer buy rates than comparable titles when first launched.

VoD is pushing the frontiers in the entertainment industry today. Looks like, linear viewing will tumble even more and the habit of watching TV Anywhere, Anytime, on Any Device will also get a boost. At Muvi Studio, we help you in making the most of your video with our VOD Platform that comes iwth a zero setup fee.